Gateway to economic growth
The icon for trade and finance in the UAE
Dubai International Financial Centre (DIFC) houses hundreds of financial institutions, including international banks, wealth funds and private investors
Published: Wed 17 Jan 2018, 6:05 PM
Dubai International Financial Centre's (DIFC) status received a substantial boost as a financial hub when it came in 10th in The Banker magazine's annual International Financial Centre (IFC) rankings, in September last year. This places the city alongside major financial hubs such as London, New York and Singapore.
Since its establishment in 2004, DIFC has become the financial hub for the Middle East, Africa and South Asia (MEASA), providing a top-notch platform that connects the region's markets with the economies of the world. In fact, as part of its 2024 growth strategy, DIFC has refocused its growth to encompass the latent potential of the fastest-growing emerging markets in the MEASA region and stimulate trade and investment flows along the Southeast Asia's economic corridor.
The centre includes an independent regulator and judicial system, a global financial exchange, breathtaking architecture, a thriving business community, vibrant cafes and art galleries, as well as support services. The area boasts of modern office spaces, retail outlets, residential apartments, green spaces as well as world-class hotels. These feature hands-on facilities make for great incentives for individuals and companies seeking to set up in the district.
DIFC is one of Dubai's freezones, which means it offers companies 100 per cent ownership without the need for a local partner. The district is governed by a common-law framework distinct from the UAE legal system with laws and regulations issued in English. This creates an optimal environment for financial services and related industries and services to grow. This framework is entrenched in the UAE's constitution and the country's laws, both at Federal and Dubai levels, permitting DIFC to have its own civil and commercial legal framework, inclusive of financial services regulation and a courts system modelled closely on international standards and principles of common law and tailored to the region's distinctive needs.
World-class financial services
A large number of banks and brokerage firms have established a presence in DIFC. Some of the most common corporate banking products provided from the district include project, structured and corporate finance, capital market solutions, credit solutions, accepting deposits, brokerage, trading, research, treasury, and custody, clearing and settlement.
From here, banks are able to service the region's growing financing needs and support growing sophistication of businesses operating in and from around the region. Recent years have seen the expansion of the corporate sector with more sophisticated financing requirements.
The DIFC's legal and regulatory framework has created a highly conducive and secure environment for the growth of banks offering a wealth of services, including Commercial banking, Investment banking, Trade and Export Finance, Project and Infrastructure funding, Treasury services and Correspondent banking. Some of the benefits provided by the district include:
Zero per cent tax efficiencies: DIFC provides a 50-year guarantee of zero taxes on corporate income and profits, enhanced by the UAE's wide network of double taxation avoidance treaties with more than 50 countries.
Hub and spoke model: Attractive location for management, treasury centres, or regional management, booking of assets, risk management, and product structuring and development, followed by roll out to branches regionally and globally.
No restriction on capital repatriation: DIFC-based companies face no restrictions or constrains on capital or profit flows, and there are no currency exchange controls in this U.S. dollar-denominated jurisdiction.
Full foreign ownership: Within DIFC, subsidiaries and other incorporated entities enjoy 100 per cent foreign ownership, as well as a flexible regulatory environment that allows for a wide range of options for structuring legal entities.
Robust regulatory framework
One of the principal factors behind the district's success is its independent risk-based regulator, the Dubai Financial Services Authority (DFSA). The DFSA grants licences and regulates the activities of financial services conducted through DIFC. The DFSA is recognised by the U.K.'s Financial Services Authority (FSA), the U.S. Federal Reserve, and is a member of the International Organisations of Securities Commissions (IOSCO). Moreover, the DFSA has established more than 90 MOUs with regulators and central banks across the globe.
By operating from DIFC, international banks enjoy a sophisticated and well-established legal framework that supports cross-border financial products that might otherwise experience multijurisdictional risks or regional restrictions on foreign financial institutions providing wholesale banking services. It is also an ideal location to provide and manage supply and capital equipment financing, to maintain international currency accounts, and to manage cross-border transaction settlement in multiple currencies.
International loan syndications and other financing initiatives benefit from the DIFC platform since most international players are based in the centre and benefit from the strength of its legal framework.
In September last year, DIFC announced the launch of The Academy, a state-of-the-art facility for the promotion of excellence in business and financial services.
According to reports, the Academy will form partnerships with leading business schools and universities from around the world to deliver a range of executive education programmes. The new facility will also reportedly host regular workshops and seminars led by industry experts from DIFC and its community.
On-site teaching will be spread across The Academy's 21 seminar rooms, three lecture halls, and three large auditoriums, all of which are equipped with the latest IT and A/V equipment. Students will also have access to a library and resource centre, prayer room, study areas, and videoconference facilities. Each year, DIFC holds over 100 workshops and seminars for its growing community of more than 21,000 professionals.
Spotlight on FinTech
The FinTech Hive at DIFC differs from other accelerators across the globe, as both FinTech and financial institutions are housed under one roof. Major financial institutions from across the globe have set up in DIFC to undertake business in the region. DIFC believes that innovation would be driven when talent from inside and outside the ecosystem work in harmony to create the ideal product. This self-contained environment is an ideal nurturing ground for creating and developing an exceptional FinTech hub that meets the needs of the financial services industry, stakeholders and customers alike. The initiative is the first FinTech accelerator in the region and has become a popular programme attracting over 45 global, regional and local partners and participants. According to reports, feedback from the programme participants has been that DIFC's ecosystem of over 1,750 companies and Dubai's reputation as the gateway to the region contributed to its success. As part of the hive, proposed concepts will be taken through a 12-week accelerator programme. Here people will get the opportunity to test and develop innovation in collaboration with senior executive leaders from renowned financial institutions.
Along with many banks, financial institutions and services, DIFC has a vibrant and active community peppered with art galleries and fine dining restaurants. The art galleries in the area showcase a wide range of art and culture from across the region. Plus, works of art have been deployed at public spaces across the district to complement the surroundings.
The area also hosts Art Nights, an event that brings together elements of art, music, film and design through a variety of indoor and outdoor activities. Also, some of the city's buzzing restaurants are located in the district and offer a delectable array of choices that suit the tastes of its community.
Building a strong financial foundation (Quotes by Arif Amiri, CEO of DIFC Authority)
"Dubai needs little introduction to India, but the continued evolution of DIFC is opening the door to new markets and fresh opportunities for the Indian economy and its burgeoning private sector."
"Our visit will highlight DIFC's status as an internationally recognised platform that is stimulating trade and investment in the emerging economies of the South-South corridor as well as connecting businesses with overseas markets. The scale of our growth strategy shows that the opportunities for India are vast."
- Both quotes in context of DIFC representatives reaching out to Indian investors and the Indian financial sector.
"We are making strong progress against our 2024 targets, which are to have 50,000 employees, 1,000 financial firms, 5.5m square feet of occupied space, $250 billion of assets under management and a balance sheet of over $400 billion."
- Amiri speaking about DIFC's major milestones in the first half of 2017.
"On the subject of change and adaptation, the region is undergoing tremendous transformations and is poised to shape the future of finance and financial innovation. The combination of technology, innovation and smart policy making must be embraced by the financial sector across emerging and developing economies. By providing an established platform for firms to tap into transformational opportunities throughout the region, the DIFC is ever more committed to the advancement of the region's financial infrastructure."
- Amiri, referring to an IMF report that highlights the growing need for structural reform in the GCC region.